Real Powerball payout rate is 30%. Does it make sense to play?Prev Topic Next Topic

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abjorik

New York
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Jul 2, 2014, 8:20 pm

According to Powerball website the payout rate is 50%, but they do not include the taxes paid on prizes which is 39.6% Federal Tax rate plus State and Local taxes on prizes. So, does it make sense to play a game that pays around 25-30% after taxes? Basically when you pay $2 for ticket it's worth 60 cents.

I do not know if I should keep playing Powerball. I think they should at least add one more prize for guessing 2 numbers in first field.
GiveFive

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Jul 3, 2014, 4:17 am

Quote: Originally posted by abjorik on Jul 2, 2014
According to Powerball website the payout rate is 50%, but they do not include the taxes paid on prizes which is 39.6% Federal Tax rate plus State and Local taxes on prizes. So, does it make sense to play a game that pays around 25-30% after taxes? Basically when you pay $2 for ticket it's worth 60 cents.

I do not know if I should keep playing Powerball. I think they should at least add one more prize for guessing 2 numbers in first field.

While I do appreciate your perspective as to the real value of a ticket, I personally don't bother to consider the true value of a ticket at all whenever I buy tickets.

To me, it's a very binary thing. After the drawing is held, my ticket is either worth something because I won a prize, or it's completely worthless. (I might add that most of the time my tickets are worthless, but there have been a few occasions where they were worth a few bucks)

Before the drawing, I think of my ticket as being worth what I paid for it. I say that because someone might take it off my hands and give me what I paid for it, but any ticket I might buy isn't for sale anyway. To me playing the lottery is a form of entertainment/fun, and if I happen to win a large sum of money while playing it, that'd be the icing on the cake. I have to believe the vast majority of players think of it as I do.

Just like everybody else, I want a good bang for my buck. But when it comes to me playing the lottery, that rule doesn't apply.

Play Smart!
abjorik

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Jul 3, 2014, 4:31 pm

But still, when the officials say the payout is 50% it should be 50%. What I don't like is that Powerball always advertises one thing, but in reality is another. Just like a jackpot (cash option is always considerably less than advertised amount) and the payout is less than 50% advertisement.

Why don't we make jackpot games just like in Europe when the advertised jackpot equals to the money that you'll get.

P.S. Interesting fact, Population in Europe is around 500 million people and the odds of winning EuroMillions is 1 in 116 million, while the population of the United States is 320 million and the odds of winning the jackpot is 1 in 175 million.
Drenick1

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Jul 4, 2014, 12:54 pm

Quote: Originally posted by abjorik on Jul 3, 2014
But still, when the officials say the payout is 50% it should be 50%. What I don't like is that Powerball always advertises one thing, but in reality is another. Just like a jackpot (cash option is always considerably less than advertised amount) and the payout is less than 50% advertisement.

Why don't we make jackpot games just like in Europe when the advertised jackpot equals to the money that you'll get.

P.S. Interesting fact, Population in Europe is around 500 million people and the odds of winning EuroMillions is 1 in 116 million, while the population of the United States is 320 million and the odds of winning the jackpot is 1 in 175 million.

It would indeed be nice if our jackpot games took a cue from Europe and Canada where the advertised jackpot is what you get free and clear of taxes. Our government is too greedy to let this cash cow of a game go tax-free.
Stack47

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Jul 4, 2014, 1:09 pm

Quote: Originally posted by abjorik on Jul 3, 2014
But still, when the officials say the payout is 50% it should be 50%. What I don't like is that Powerball always advertises one thing, but in reality is another. Just like a jackpot (cash option is always considerably less than advertised amount) and the payout is less than 50% advertisement.

Why don't we make jackpot games just like in Europe when the advertised jackpot equals to the money that you'll get.

P.S. Interesting fact, Population in Europe is around 500 million people and the odds of winning EuroMillions is 1 in 116 million, while the population of the United States is 320 million and the odds of winning the jackpot is 1 in 175 million.

Don't want to nit-pic, but the population of Europe is closer 740 million.

"But still, when the officials say the payout is 50% it should be 50%."

Every state lottery website gives the explanation so it shouldn't be necessary to for even more small print on the back of the ticket.

"Why don't we make jackpot games just like in Europe when the advertised jackpot equals to the money that you'll get."

We don't have a national lottery and the individual states can only legislate the tax rules for their respective state, but can't lower or eliminate federal tax. Yearly payments was the only option when lotto games first started. When they began offering cash, the rule of thumb to estimate "how much" after taxes was to divide the advertised prize by 3. The after tax $101 PB jackpot cash prize should be about $34 million.
Stack47

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Jul 4, 2014, 1:28 pm

Quote: Originally posted by Drenick1 on Jul 4, 2014
It would indeed be nice if our jackpot games took a cue from Europe and Canada where the advertised jackpot is what you get free and clear of taxes. Our government is too greedy to let this cash cow of a game go tax-free.

"It would indeed be nice if our jackpot games took a cue from Europe and Canada where the advertised jackpot is what you get free and clear of taxes."

Europe and Canada has a different tax structure than the U.S. and gambling isn't taxed, but that doesn't mean it will never be taxed. Tax on certain gambling winnings was in the Federal tax code before the PB and MM began.

Why is it that some lottery players just can't understand the top MM and PB prizes is the amount the winner gets after a number of yearly payments?

And why can't they understand the Feds always taxed lottery winnings and "our jackpot games" have no control over?
RJOh

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Jul 4, 2014, 4:08 pm

Quote: Originally posted by abjorik on Jul 2, 2014
According to Powerball website the payout rate is 50%, but they do not include the taxes paid on prizes which is 39.6% Federal Tax rate plus State and Local taxes on prizes. So, does it make sense to play a game that pays around 25-30% after taxes? Basically when you pay $2 for ticket it's worth 60 cents.

I do not know if I should keep playing Powerball. I think they should at least add one more prize for guessing 2 numbers in first field.

Have you ever won one of their major prizes? If not then not of the stuff you're complaining about effect you and I've never hear a jackpot winner complain.

* you don't need to buy every combination, just the winning ones *
weshar75

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Jul 4, 2014, 4:14 pm

The lotto is my form of entertainment so I will continue to play powerball even though they raised the prize to $3 a line if you want powerplay. I always add powerplay to my ticket when I can afford it. I would like to win $2 million some day hopefully soon.-weshar75
Stack47

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Jul 5, 2014, 8:58 am

Quote: Originally posted by RJOh on Jul 4, 2014
Have you ever won one of their major prizes? If not then not of the stuff you're complaining about effect you and I've never hear a jackpot winner complain.

because the majority of us, if we do win, will win prizes under $600 and won't be taxed anyways. California's tax rate on income over $508,000 is 12.3% thought currently lottery winnings are not taxed.

Many people are in favor of a federal flat tax rate and probably more likely to see that than making lottery and all gambling winnings tax exempt.
jimmy4164

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Jul 5, 2014, 3:05 pm

Quote: Originally posted by abjorik on Jul 2, 2014
According to Powerball website the payout rate is 50%, but they do not include the taxes paid on prizes which is 39.6% Federal Tax rate plus State and Local taxes on prizes. So, does it make sense to play a game that pays around 25-30% after taxes? Basically when you pay $2 for ticket it's worth 60 cents.

I do not know if I should keep playing Powerball. I think they should at least add one more prize for guessing 2 numbers in first field.

Abjorik,

Unless you're lucky enough to hit one of the higher tiered prizes, your return is even worse.

Click Here for more details...
(These numbers are BEFORE taxes!)

--Jimmy4164
rcbbuckeye

100

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Jul 6, 2014, 9:14 am

Quote: Originally posted by abjorik on Jul 2, 2014
According to Powerball website the payout rate is 50%, but they do not include the taxes paid on prizes which is 39.6% Federal Tax rate plus State and Local taxes on prizes. So, does it make sense to play a game that pays around 25-30% after taxes? Basically when you pay $2 for ticket it's worth 60 cents.

I do not know if I should keep playing Powerball. I think they should at least add one more prize for guessing 2 numbers in first field.

Look, the lottery is an easy way of gambling. Where else can you toss a dollar, or with PB 2 dollars and have a shot at millions. A very, very low shot, but somebody wins somewhere, sometime. Most people do not care about taxes, values of tickets and that stuff. Hell, when I buy a ticket, I'm thinking of the payoff. I can easily calculate the cash payout if I am ever so lucky. So I never get wrapped up in the annuity prize, taxes or any of that stuff.

If ticket values really bother you, there are always the numbers game like Pick 3 and Pick 4. I play those games once in a while, but I really like to swing for the fence with the big games. Just more fun for me. To each his own.

CAN'T WIN IF YOU'RE NOT IN

A DOLLAR AND A DREAM (OR $2)
jimmy4164

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Jul 8, 2014, 12:33 am

Quote: Originally posted by rcbbuckeye on Jul 6, 2014
Look, the lottery is an easy way of gambling. Where else can you toss a dollar, or with PB 2 dollars and have a shot at millions. A very, very low shot, but somebody wins somewhere, sometime. Most people do not care about taxes, values of tickets and that stuff. Hell, when I buy a ticket, I'm thinking of the payoff. I can easily calculate the cash payout if I am ever so lucky. So I never get wrapped up in the annuity prize, taxes or any of that stuff.

If ticket values really bother you, there are always the numbers game like Pick 3 and Pick 4. I play those games once in a while, but I really like to swing for the fence with the big games. Just more fun for me. To each his own.

rcbbuckeye,
I agree, 100%. Its' why I play. I didn't post a link to the 2010 Powerball summary to discourage people from playing. It was to get them to question people who tell them they can come out ahead over time winning only low tiered prizes. When they see that the VAST MAJORITY of players average about $0.20 on the dollar, it might occur to them that they must win FIVE(5) times as much just to BREAK EVEN!
--Jimmy4164
p.s. And I don't mind contributing $0.80 to my state, as long as they distribute it wisely.
abjorik

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Jul 8, 2014, 11:38 am

If they pay higher payout it means more players would have won and pay taxes from their winnings!